Listening for Intent

Buyers from the city or suburbs often come "up here" with a vague belief that the 'country' is this vast, kind of wild west expanse of unregulated freedom, and sometimes don't think that there might be limits on what they can do with what they're looking to buy. A great part of that stems from the fact that country property is a very different animal in many ways than city or suburban property. If you've never had experience with a septic system (and most city people haven't), it wouldn't even dawn on you that you couldn't put an addition on a little lakefront cottage on a quarter acre lot because the septic might not be expandable. Likewise, if you're looking at a house on 20 acres, there's plenty of room to build a second home for your mother, right?

Not necessarily. There are myriad situations and restrictions in the country that may limit what you can do, or think you can do. And just because you can do something in one situation doesn't mean you can do it in another situation that appears, on the surface at least, similar. The range of situational specifics here in the country makes the patchwork of coop rules in the city (where you can have a 20 pound dog, but not a 30 pound dog, and not if you also have goldfish or a turtle) seem almost sane.

Which is why I spend considerable time listening for intent when I'm out with buyers. Buyers often make comments very casually in passing that indicate intent, based on assumptions they're making that may not be true. One half of a couple may comment, for example, "Yes, the house is small. But if we added a guest house, it would work." Now, in some situations, building a guest house would be possible, but in others it wouldn't. When a statement like that is made in the presence of a real estate agent and goes unchallenged or unqualified, buyers may make the tacit assumption that it's true and that truism gets transferred to other properties and situations.

To stay with the guesthouse example, some lake developments permit guesthouses and some don't. It probably wouldn't even dawn on most potential buyers when looking at a house on 5 acres in lake development (with all that extra land) that they wouldn't be permitted to erect a second living structure, particularly if they'd visited another lake development where it is allowed. If they were being shown the house by a Realtor who didn't have much experience with lake developments, that agent might not think to point out that there might be a restriction.

Here are some of the more common "mistaken assumptions" I hear.

• We can add on to the house. Not always true, particularly in areas close to water (lakes and rivers) or or small parcels with wells and septics, where there may not be sufficient setbacks and separation for a septic expansion.
• We can build a second house for mom. Two full houses (with a kitchen and bath) are often not permitted on a single tax parcel, even if there are 20 or 50 acres. Building a second full home (rather than a small guesthouse, which wouldn't have a kitchen) generally requires subdivision of the parcel.
• We can subdivide off a piece for my brother to build a house. There are various rules that vary by township regarding subdivisions. Not all property can be subdivided, due to limited road frontage, right of way access, insufficient acreage, wetlands considerations, or deed restrictions or covenants prohibiting further subdivision.
• No pond? We can just build one. Good ponds require hearty springs, not just stream run off. (Run off ponds often go dry in August.)
• We can clear out all those trees to open the view. This isn't a slam dunk. Covenants, particularly in more recent subdivisions and lake developments, may limit tree cutting to maintain privacy or the feeling of a setting. And there are areas where tree cutting is limited for scenic protection, or the protection of wildlife and eagle nesting habitats.

The 3 of us at Catskills Buyer Agency feel pretty strongly about working exclusively with our clients. Some buyers do want to hop from agent to agent, seeing some houses with this agent, some with that agent, and some with us. But that doesn't fit with how we work in representing out clients. It's not just about making the sale and getting a commission. It's largely about maintaining continuity, and having all the information — from feedback on houses and settings, to the multitude of intent indicators — that enables us to fine tune the shopping process. That shared body of knowledge between us becomes more valuable over time, as criteria evolve and priorities realign. A key part of that is building an inventory of intent and assumptions.

Comments

[q]

David,

Are your non-lakefront sales gravitating towards $150/ft?
Lakefront, of course, is understandably another entity unto itself.

[David Knudsen]

I don't think $/sq. ft. is a comparative metric that many of us in the business pay much attention to, unlike in the city. The reason is that setting, acreage and house style / condition are probably more significant determinants of value than square footage per se.

[mal]

Perhaps q noticed that 4 of the 5 properties David highlighted in the "what's moving" thread sold for remarkably close to $150/sq ft ($148, 151, 153, and 157). The 5th was $114/sq ft.

[It's B.!]

Dave,
I think you really have to - uh (to use the current phrase) - "drill down" - a bit to uncover a few items.

To be sure, there are deals getting done up here but the bias is clearly towards the savvy buyer - not the seller.

To wit -

A recent property that sold in Bethel.

First offered for $289,900 - then reduced to $249,000 - then sold a few days ago for $155,000.

Let's a take a look at what exactly sold for 155k.

A new farmhouse with three bedrooms and two plus bathrooms (1450 square feet) on 2.5 acres. The house was built in 2008 and it came with a fireplace, wood floors, cathedral ceiling, granite countertops. Guess what? It was also on a quiet road!

On paper, that's what most cityfolk are looking for and at $155,000 that's quite a value compared to what this house (and others) fetched only two years ago.

Without naming names, similar houses on Crawford Road in Highland, sold in the low 3's to upper 2's from 2006 through 2008.

Not any more.

That's about a 35% to 40% price cut for this kind of item and it's no wonder deals are not comping out when an appraiser sees this kind of property selling in the mid 100's.

Congratulations to the seller (who couldn't fetch a bid for this house when it was in the mid to upper 200's and languished on the market for over 200 days) who finally took the plunge and became realistic.

Voila!

Savvy city buyers will still close a deal - even for a discretionary purchase in a recession.

The price - however - has got to be right or they'll walk.

Yours truly,
B.

[David Knudsen]

B, I don't think you have quite all the information on that particular sale. I understand it was a short sale, so it wasn't a question of the seller becoming realistic, but rather of the lender agreeing to, pardon the pun, take it in the shorts. This is probably about the last of the ill-conceived investor/developer properties that have had to go the foreclosure sale / short sale route to find a buyer. (About the last --- there is one left, a non-lakefront house in Chapin that just dropped another $100,000 to $599K.

There's a group on here who never want to hear that setting, house layout, location or anything other than square footage and price have anything to do with it. I'd shown this house on Mt. Hope Road quite a few times in the last 6 or 9 months. I was privvy that it was probably going short sale and there was a deal to be done under $200,000, so I showed the heck out of it.

None of the folks I showed it to were interested in buying it, even though I thought it was a great deal. One of those buyers ended up buying a Catskills Farms house (one of the ones you reference down on Crawford Road) for considerably more than they could have gotten this house for. Another client agreed it was a great deal, but decided they want something with more privacy, and are now looking in the upper $200's. So I don't think it's always just about money.

By the way, Catskill Farms is doing real well with the product they're offering at their price point.

[compo]

Can anyone give some more information on the $155,000 sale? Location, MLS if still listed, MS live map link, etc.

You have my curiosity.

[CF]

For many buyers, - "setting, house layout, and location" is the only thing that matters. Why would you buy an undesireable house on a undesireable piece of land as your dream getaway? Some compromise is always in order, but not to the extent that you sacrifice the essence of your goals.

And B. (according to the Credit Bulletin), demand for those Crawford Rd and similarly located houses still exceed supply, as they have since late 2007. And since you bring it up, none of them are included in Dave's analysis of the local sales landscape (or your MLS analysis, since they are private, not MLS, sales). It seems like the only Catskill Farms houses that go unsold are those listed by a realtor - which is an interesting commentary on local real estate marketing.

Thanks for the years of great work, David. It's invaluable.

[B2]

Compo - in Bethel, NY the GPS coordinates for the site are:

http://maps.google.com/maps?ll=41.734962,-74.815925&z=15&t=h&hl=en

A quiet country road near Bethel Woods. Farmland. David could sketch out the details if he has time.

CF, I believe that "setting and location" are the same thing.

And since you brought it up in your post, why is it that:

"the only CF houses that go unsold are those listed by a realtor."

Wow...and after all these years!

Thanking you in advance.

B2

[David Knudsen]

Here's the listing on it:

http://scmls.fnismls.com/publink/default.aspx?GUID=771b738b-eada-4ab9-9480-c51c5b2f49c2&Report=Yes

I sense a blogbrawl heating up here. I want to clarify that I don't think there's anything ostensibly wrong with the Mt. Hope Road house, and the buyers got a great deal in my opinion. But it's not accurate to extrapolate that Catskill Farms cottages are now worth 40% less because this single sale set the market (and the CF houses continue to sell), nor can this sale be ignored.

I'm a bargain shopper, and love those stores that mark down prices by how long the closeout merchandise has been on the market. Occasionally I'll find a great deal tucked in among the racks, like a leather jacket for $35. But that doesn't set my expectation that leather jackets cost $35. I just consider myself lucky that I found something I like in my size on the rack, even if it isn't quite the style or color I'd choose if I was paying "market price."

I also want to comment on this Mt. Hope house versus a CF cottage, as I'm likely one of the few folks on here who have seen both. The Mt. Hope Road house was designed and built by an investor/builder as a "one off." He tried to do the reproduction farmhouse thing, but didn't get it quite right. There are a few things that are off about it, if you're going for the farmhouse narrative. The kitchen countertops and floor are a strongly patterned granite, the bathroom has a molded tub/shower unit, the exterior is dark stained without contrasting trim. He did get a number of things right, as well — the floors are nice wood, the doors are solid stained wood.

But the house doesn't have that same detailing that evokes the farmhouse narrative that Catskill Farms has honed over the years through multiple houses — the interior sliding barn doors, wainscotting, whitewashed wood plank ceilings, bathroom vanities made from old cabinets, and tiled showers and clawfoot tubs. There's just a different feel. When buyers go into a Catskill Farms house, they 'get it'.

A good analogy is cars. A lot of younger, hipper buyers shy away from American cars not because of the 'specs' or even reliability, but because the fit, finish and style aren't quite up to what they can get from a European or Japanese brand. A VW Jetta evokes desire and longing, a Chevy Cobalt doesn't. If a buyer can get the same carrying capacity from a Chevy Cobalt or Ford Focus, why are they willing to pay $10,000 more for a Jetta?

[CF]

David = as you have said many times, the main attribute the spec builders lacked during their plunge into speculation was originality and an understanding of the marketplace. Well-designed, well-priced, unique homes have continually found a buyer over the last 5 years - Catskill Farms is not the only designer/builder who has successfully sold cool houses up here over the past 5 years. The copy-cats, jump-on-the-bandwagon-two-years-two late, anything I build will sell people have had a hard time of it because savvy buyers respect originality, and since many of these same savvy buyers have looked for quite some time, they understand the marketplace far more than often given credit for by posters on this blog.

Personally, I'm amazed by the sophistication of the approach of our customers- they definitely have researched their options - and most interestingly, the life decision of needing/wanting a getaway outweighed the fear of buying at the wrong time for our customers over the last year.

While it's up for debate whether our homes are 'affordable' or 'worth it' since that will always remain subjective, it is very true that we concentrated on a much lower target price than the other players - as David said over and over and over to anyone really listening - Sullivan County is paramountly a middle to upper middle income destination. That was true during the boom, and today during the Great Recession.

[ar]

Just seems that every time somebody reports a sale -- like the Mt. Hope Rd. house -- that indicates a severe market decline, Dave strains to come up with explanations for why the latest example is an outlier. One of the favorite explanations is that the sale should be discounted because it was a "distressed" transaction, and in the case of the Mt. Hope house, a short sale. Again, the logic doesn't hold up. A distressed seller, like any seller, wants to get the most money he can for his house. The fact that the Mt. Hope house went for only $155,000 is a reflection of the market -- that's all the seller could get in this market. The seller's status simply doesn't change that fact. The second explanation we hear strikes me truly as a stretch. The house went for dirt cheap because of the pattern of the granite on the countertops? Come on. If we believe this line of argument, it is highly dangerous from an investment standpoint, even reckless, to buy anything in Sullivan County that doesn't meet the precise (and frankly quirky) design aesthetic of one particular builder whom Dave loves to plug. Get the trim style wrong on the exterior paint job and you'll lose 40% on resale! There's a far less strained interpretation of the Mt. Hope sale: the market is deeply depressed.

[David Knudsen]

I'm not in some bizarre denial about the sale. But B only tends to post on here about a sale when a particularly low sale comes through relative to it's specs. I'm not at all saying the market isn't depressed; it certainly is over last year's levels.

The overall point of B's post is that because this house sold at $155K, the CF farmhouses are now 'worth' 40% less, which just isn't true. This selective posting of single sales (which are always low sales, by the way) no more paints a total picture of the market than if I were to post every sale above $300,000 as 'evidence' that the market is higher. So where are the posts about the $282K sale on Buck Brook, the $485K sale on Stewart, the $300K sale on Dill or the $270K sale on Grooville. Of course, I forgot, we can't consider those sales because those were bought by stupid, blind city buyers led to the slaughter by us self-serving and deceptive Realtors. Even if someone bought something else at a higher price after being shown the Mt. Hope Road house, it must be because we cast a spell over them.

Yes, ar, there are reasons why someone buys one house over another. Just like someone buys one car over another.

I think it's far more reckless to pull out single sales as some definitive confirmation of 'the market'. Which is why I steadfastly try to avoid doing so (except my post about the Chapin sale, because it was such an outlier.)

And yes, I do like Petersheim's houses. And so do many of my clients. They don't always buy them for one reason or another. Sometimes it's price, they need more space for the money. Sometimes it's setting or location — they want to be further north in the county, or want something lake-related or in a more open, rolling setting with a view.

[compo]

I like what Catskill Farms has been doing in SC and not to take anything away from them but they did not invent the small house plan concept. This has been a trend that has been developing for a number of years and quite honetly is overdue. See the cool designs for the architect below and the link to a Journal article discussing small house plans.

http://www.rosschapin.com/index.html
http://online.wsj.com/article/SB121633957931763985.html

[Bix]

Just to go back to the subject of the 155K house: there's no question that it is deficient in certain ways. It strikes me as a bit sterile, no landscaping etc., and lacking in charm.

BUT.... this is still an amazing value at 155K, and I think it is significant if it represents a trend. I saw a number of houses in that price range a year ago, and most were absolute dumps or had massive issues, and a matter of fact I saw houses at which the asking price was 100K higher that were not as nice as this one.

So, short sale notwithstanding, I don't see how one can get away from the fact that this property definitely represents a depression in market values.

[Reg]

It's also interesting that B, B2, or whatever name he's using on any given day, is willing to hijack any comment thread- no matter how irrelevant - just to make his increasingly tortured point.

So speaking of the original post, I want to hear from David how we can do the converse: listen to sellers for their intent.

[Rod]

Reg - not to beat a dead horse, but by knowing the ORIGINAL sales data including date and price, and being aware of the subsequent timing of price reductions (or lack thereof), a buyer with good information can see signals/intent of the seriousness/realism of the seller.

I think there are a lot significant price adjustments occuring, and for the first time since 2003, the inventory of good houses between $225k-$340k has increased dramatically. Just 15 months ago, nothing much interesting was available in this price range. I think the market is correcting quicker than we are reporting.

[Bix]

Well, I don't know about that. I think he may have a point about the 155K house.

[Kate]

Reg,
I think the person was just trying to shed some light and be a bit transparent with a recent sold listing within the past two weeks in Western Sullivan County like the one that sold for 155k in Bethel.

I, too, believe it's a trend that we'll see in the next six months and not an aberration.

Wait and see.

Kate

[Rod]

Kate - actually it won't and can't be a trend, since there are very few, if any, additional ill-conceived specs houses out there. All the speculators are gone (besides the house at Chapin, which should really prove the demise of the county when that property sells).

There may be many low sales in the future, but they won't be similar to this one, where an out-of-town speculator made a mistake, -in price, location and design- since most of these mistakes have been foreclosed on, short sold, or liquidated.

[David Knudsen]

Just a clarification. The builder of the house on Mt. Hope Road was local, as was the builder of the 3 foreclosure houses above Callicoon (that have been flogged to death on this site.)

[Mr. N]

Oh how about that, I've been in that house, when it was almost done. I
interviewed the builder though ultimately went with someone else for my
renovation. That explains a LOT.

That was a very odd little house. I'm not even sure I'd consider it such a
killer deal, even at that price. David's right, it had truly strange
brightly colored granite or marble, and a couple different kinds in the same
room at that, a lot of little touches that made it seem "cheap" like the tub
mentioned above, and so on. If I recall correctly too upstairs was going to
be wall to wall carpeting. Could be wrong about that, but look carefully in
that one picture with the bed in the corner. That's raw plywood subfloor
underneath it -- it's possible the house wasn't even finished in some
places.

Basically it felt like a cheap 50's ranch house on the inside in a lot of
ways, while the outside of it really had nice proportions and style. It had
serious issues though, very odd decisions were made for a spec house build,
sort of get the feeling it might have been whatever pattern/color/material
was on sale in a few places. Also it had been under construction for about
two years, a year ago. It was one of those spec houses that was just
languishing half finished for a long time.

And the location wasn't really ideal either. It's out in the fields in a
quiet area, but it feels kind of exposed. It's right on the road -- which
admittedly is a small country road, but there's a bunch of other houses in
sight including a beautiful but if I recall correctly nearly
destroyed/decayed large farmhouse/barn type thing across the road and people
on either side with the house not secluded in any way.

That house was a tough sell at almost any price. I wouldn't have bought it
at $155k if I were still looking. I haven't been in as many houses as David
has, but I remember this one vividly. To keep David's analogy -- it's like
that bright purple Brioni suit you find in your size at Marshall's for $250.
You say hey, a Brioni suit should cost thousands. And you stare and stare
and stare at it. Then you snap back to reality and realize you're never
going to walk around in a bright purple suit regardless of the price and
leave it on the rack.

Or something... ;-)

[Bean-Stalk]

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